On September 14, 2010, the Court of Justice of the European Union confirmed in Akzo Nobel v. Commission that documents prepared by in-house lawyers are not privileged under EU rules. Case C-550/07 P, Akzo Nobel Chemicals Ltd et al. v. Commission (not yet published in ECR). This approach is at odds with the principles applied in the United States, the United Kingdom, and some other jurisdictions, but is consistent with previous case law of EU courts. The court's ruling is of general application to investigations conducted by the European Commission (EC), although Akzo and previous cases related to antitrust investigations.
Court Denies Privilege to Notes Prepared by In-house Counsel
Legal professional privilege protects communications between lawyers and their clients. The EC cannot require disclosure of privileged documents and cannot use these documents, for example, as evidence of competition law infringements.
According to established EU case law, the privilege for written communications between lawyers and clients applies only if the following conditions are met: (1) the communications are made for the purposes and in the interest of the client's rights of defense and (2) the communications emanate from independent lawyers admitted in the European Economic Area (EEA).
On September 14, 2010, the Court of Justice confirmed that the requirement of independence precludes any employment relationship between the lawyer and his or her client. Therefore, legal professional privilege does not cover internal notes prepared by in-house counsel unless these notes (1) merely report the text or the content of communications with external lawyers or (2) are drawn up exclusively for the purpose of seeking legal advice from external counsel.
Ruling Puts an End to a Seven-year Legal Battle
The case reviewed by the court goes back to 2003 when the EC, assisted by representatives of the U.K. Office of Fair Trading, raided the premises of Akzo Nobel Chemicals in the United Kingdom. The EC seized a considerable number of documents, including copies of two e-mails exchanged between Akzo's managing director and its in-house counsel, a member of the Dutch bar. The EC determined that these documents were not covered by legal professional privilege because they were not prepared by an external counsel.
Akzo challenged this decision, but in 2007 the Court of First Instance (now General Court) sided with the EC. Akzo appealed before the Court of Justice. Its appeal was supported by several lawyers' associations, all advocating for the extension of legal professional privilege to in-house lawyers. Akzo's appeal was also supported by Ireland, the Netherlands, and the United Kingdom. However, the Court of Justice rejected the appeal and confirmed the EC's decision.
EU Approach is at Odds with National Law in Several Countries
The court's ruling is consistent with the approach adopted by most European continental legal systems. However, it contradicts the principles applied in the United Kingdom and certain other EU Member States (Ireland, the Netherlands, Greece, Poland, and Portugal), as well as in the United States, where legal professional privilege extends to communications with all lawyers, including in-house lawyers admitted to a national bar or law society. The court ruled that there was no justification for bringing EU law into line with the minority approach in EU Member States.
The court considered that even "enrolled" counsel (i.e., in-house lawyers admitted to a national bar or law society) do not enjoy the same degree of independence from their employers as external lawyers do vis-^-vis their clients. According to the court, notwithstanding their professional ethical obligations, in-house counsel cannot be treated in the same way as external lawyers.
The court also confirmed that communications with external counsel are privileged only if the counsel is admitted in one of the EEA Member States. In this respect, EU rules differ from the national rules of most EEA Member States, as well as those in the United States, which consider communications with external counsel admitted in other jurisdictions to be privileged (based on principles of reciprocity).
The approach adopted by the court applies only to investigations conducted under EU law. National rules continue to apply to investigations under Member State national laws.
How to Ensure Your Documents are Privileged under EU Rules
- Exchanges with external counsel are privileged if they are made for the purposes of the client's rights of defense and if the counsel is admitted in the EEA. Ensure that EEA-admitted counsel are always involved in communications which relate to EU law matters. Mention prominently on any notes prepared for the purpose of seeking external legal advice that they are prepared at the request of external counsel.
- Notes prepared by in-house counsel are not privileged unless they (1) are drawn up exclusively to seek legal advice from external counsel or (2) report the text or the content of communications with external counsel. Do not amend any written legal advice received from external lawyer (e.g., by adding further comments). Do not circulate privileged correspondence widely within the company.
- In the event of a dawn raid, object to seizure by EU officials of documents that you consider to be privileged. The officials are not entitled to a cursory look if this would reveal the contents. If EU officials insist on seizing privileged documents, ask for them to be placed in a sealed envelope to have their status determined in court. Always have an external counsel present during a dawn raid.